Federal Reserve Bank of San Francisco
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Taiwan’s Banking Sector Reforms: Retrospective and Outlook

May 20, 2016

Author(s): Nicholas Borst and Cindy Li

The Taiwanese banking system has evolved significantly since the government amended the Banking Law in 1989 to promote internationalization and liberalization of the banking sector. Private banks now play a significant role in the financial system and many state-owned banks have been partially privatized. Despite much progress, Taiwan’s banking sector is marked by low profitability and excessive competition that are potential threats to the long-term health and stability of the financial system. This Asia Focus outlines the history of financial and banking reforms in Taiwan, analyzes problems that developed in the banking sector after liberalization, and evaluates current initiatives by regulators to address those problems.

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